Ernst & Young lays off 30 partners amid corporate downturn

In a significant restructuring move, Ernst & Young (EY), the global accounting and consulting firm, is preparing to reduce its number of senior partners for the first time in decades. This decision comes amid a downturn in the consulting sector that has followed the pandemic, which significantly affected corporate spending on professional services. The planned redundancy of 30 partners marks a substantial cut in the firm's ranks, a step taken to protect profits in an uncertain economic climate. EY's partnership includes 894 equity partners who share in the revenue, and 757 non-equity partners who do not. The competition among the big four accounting firms—EY, PwC, KPMG, and Deloitte—has intensified due to shrinking demand for consulting services. Following a period of steep hiring, the rise in inflation and interest rates has prompted clients to limit their spending on professional advisory services. In light of these challenges, firms like EY have opted to reassess their operational structure, leading to substantial job cuts industry-wide. EY itself is also witnessing declining partner profits, which fell by 5 percent to £723,000 in the year ending June, according to reports. While layoffs in the partner ranks are rare—given their ability to bring in lucrative work—opting for such a course of action indicates growing concerns about revenue sustainability in the current economic climate. Employees are reassessing which partners are contributing to revenues, particularly as high-performing partners express frustrations at supporting numerous underperforming colleagues. Additionally, the firm is undergoing leadership changes, including plans to replace the head of consulting. As EY seeks to navigate these precarious waters, industry insiders point out that while layoffs can be disruptive, they also signal a proactive approach toward trimming excess and revitalizing the firm. This restructuring may ultimately lead to a leaner and more focused organization better equipped to meet current demands, while also potentially positioning itself for recovery as the market rebounds in the future.